The Dissemination of Misleading Information. Ukrainian Practice

В статье рассматриваются вопросы, связанные с ответственностью за распространение заведомо ложной информации как противоправное антиконкурентное поведение. Авторы отмечают недостатки украинского законодательства, защищающего добросовестную конкуренцию, в частности, недостаток, состоящий в том, что трудно определить сумму штраф за распространение такой информации. Настоящая публикация особенно интересна примерами из практики Антимонопольного комитета Украины по привлечению к ответственности лиц, допускающих недобросовестное поведение в форме распространения заведомо ложных сведений.

Іn 2009 Article 15-1 providing responsibility for dissemina­tion of misleading informa­tion was introduced to the On Protection against Unfair Competition Act of Ukraine. The in­vestigation of cases of its violation was related to the competence of the Antimonopoly Committee of Ukraine (hereinafter — the AMCU).

According to Article 15-1 of the mentioned Act the dissemination of misleading information shall mean the provision by a business entity, directly or through any other per­son, to one or several persons or an indefinite number of persons, including in advertisement, of in­complete, inaccurate, unreliable in­formation, in particular, as a result of a selected method of statement, concealment of certain facts or inac­curate wording that affected or may affect the intention of those persons to purchase (order) or dispose of (sell, supply, perform, provide) prod­ucts, works, and services of such business entity.

Article 15-1 contains a sample list of unreliable information, the dissemination of which could be a violation, as well. It includes the fol­lowing: misleading information on the origin, quantity, price, discounts, quality, completeness of good, etc.

The number of revealed viola­tions in the form of dissemination of misleading information has been increasing gradually. The growing tendency for the period from 2009 to 2013 is shown in the diagram (pic­ture 1).

Concurrently with the grow­ing number of revealed violations, the amounts of fines have been in­creased as well (picture 2).

Although the second diagram shows the amounts of fines for all

The vast majority of violations in the form of dissemi­nation of information are the most typical lor the phar­aceutical market, for the market finance and alimen­tary products market

violations in the form of unfair competition, including the unlawful use of others’ trademarks, advertis­ing materials and packing, gaining unlawful advantages in competition as well. But given the fact that over the last few years the number of violations in the form of dissemina­tion of misleading information has been constituted as 85-91% of all unfair competition actions, we may presume that the substantial part of these fines was imposed for the ana­lyzed violation of Article 15-1.

Today, the vast majority of vio­lations in the form of dissemination of misleading information are the most typical for the pharmaceuti­cal market, for the market of bank­ing finance and alimentary products market. Pharmaceutical companies vio­late the law by disseminating un­reliable information on the thera­peutic benefit of the drugs and their own reputation. For instance, it is quite common on this market to ad­vertise a drug as an effective instru­ment against certain illnesses even though it only has a soothing effect. Also, pharmaceutical companies usually claim that they have long-term experience and their medici­nal products are recommended by the best doctors, even if it is not so. On the alimentary products market it is typical for companies to dis­seminate unreliable information on

ingredients and the quality of prod­ucts on its packaging (e.g. “with­out GMO”, “approved by Ministry of Health of Ukraine”, there is a discrepancy in ingredients actu­ally used and those mentioned on the packaging, etc.). On the market of banking finance the most recent violation is the dissemination of misleading information on compa­nies’ reputation, loan and deposit terms and conditions (e.g. “the oldest”, “the European”, “zero-cred­it”, “the best deposit”, etc.). The typi­cal violation for all markets is dis­seminating misleading information on discounts for goods.

What are the consequences of the lack of a fines calculation method in legislation?

As is known there are no meth­ods for calculating the AMCU fines imposed for violating legislation on protection of economic competition in Ukrainian legislation. The viola­tion in the form of dissemination of misleading information is not an ex­ception. For this violation companies risk facing a line up to 5% of their gross worldwide income (sales) for the last financial year preceding the year in which the fine is imposed.

In practice the lack of a fines calculation method may lead to dif­ferent kinds of abuse and lack of un­derstanding on the amount of fines among business representatives.

For example, some time ago the information about “Shilentin” was widely disseminated on the Internet and print media. “Shilentin” was a di­etary supplement but had advertised as a cure for cancer and other serious diseases. The advertisement stated: “The Ukrainian scientists announced the war against cancer. They had cre­ated the drug “Shilentin”. which can cure successfully cancer and many other diseases: hepatitis, diabetes, herpes, tuberculosis, cardio-vascular and gastro-intestinal diseases, mul­tiple sclerosis, allergies, etc.” This advertisement was also added by letters of gratitude from people al­legedly cured by “Shilentin”. Among them was Yuriy Nikolayev, a TV presenter who stated that due to “Shilentin” his cancer was overcome and he had recovered.

The cynicism of this advertise­ment is obvious, especially given

The number of cases considered by the AMCU on the dis­semination of misleading information has been increasing rapidly

the fact that “Shilentin” was not a drug. It was a dietary supplement, which even was not registered by the Ministry of Health of Ukraine and was not confirmed as a safe and effective medicinal product. The in­formation that “Shilentin” is not a drug was indicated by small difficult readable font in the corner of the ad­vertisement’s text, while the size of such advertisement took, as a rule, a half or even a full newspaper page.

The AMCU investigated this case but, as a result, the defendant faced only a UAH 30,000 fine (less than USD 4.000).

Given the lack of a method for calculation fines in Ukrainian leg­islation, it is impossible to justify the amount of a fine for a mentioned violation. But in order to understand the practice of calculating fines we analyzed the most notable violations in the form of dissemination of mis­leading information on the pharma­ceutical market in 2010 (the year of the “Shilentin” case). Among them was a case of Austrian company Boehringer Ingelheim RCV GmbH & Co KG. fined in 2010 for dissemina­tion misleading information about its “Lasolvan” drug. The advertise­ment stated: “Кашель вилікує вам, звільнить подих — Лазолван” (translated as “The cough will cure, the breath will relieve for you — Lasolvan”). Investigating this case the AMCU bodies concluded that consumers of this advertisement might have the impression that “Lasolvan” cures acute and chronic respiratory disease: flu, colds, acute and chronic bronchitis, pneumonia. But actually “Lasolvan” provided only mukoliticescoe (secretolitices-coe) and soothing effects. As a re­sult, the manufacturer faced a fine of UAH 1 million for such an adver­tisement about “Lasolvan”.

Of course, it is extremely dif­ficult to compare violations in the advertisements of “Shilentin” and “Lasolvan” bearing in mind differ­ent circumstances (different sales, different worldwide incomes, from which the fine is calculated, possible different assistance of the defend­ants during the AMCU investiga­tion, etc). But only the lack of fines calculation method causes disputes in these cases, especially given the significant difference of the sums of the fines.

Conclusions and recommendations

The number of cases considered by the AMCU on the dissemination of misleading information has been increasing rapidly. There is a strict fines policy as well, especially on the pharmaceutical market, market of banking finance and alimentary prod­ucts market. The historical maximum fine for disseminating misleading in­formation on the pharmaceutical mar­ket was fine imposed by the AMCU in 2012 which amounted to UAH 7,6 mil­lion (for the advertisement of the drug “Amizon” with the slogan “Nine out of 10 Ukrainians choose Amizon”).

When starting an advertising campaign companies should consid­er the following recommendations in order to avoid negative attention from the AMCU:

To analyze each component of the advertisement and the general impression from it as to the pres­ence of incomplete, inaccurate, un­reliable statements. The compliance of advertisement statements with the results of clinical trials of drugs and instructions for use is very im­portant as well;

To consider in advance whether it is possible for the compa­ny in question to prove the reliabil­ity of each statement in the event of obtaining a request from the AMCU (by certain scientific research, mar­ket research, etc);

If there are controversial statements in the advertisement, the company should apply to the Antimonopoly Committee of Ukraine for its recommendations on the adver­tisement’s compliance with Article 15-1 of the On Protection Against Unfair Competition Act of Ukraine.

In case of applying to the AMCU for its recommendations the company should wait for the re­sponse and not run the advertisement (the AMCU may ask to make some changes in the advertisement or even draw a negative conclusion about its compliance with legislation).

Anyway, the choice of strategy of conduct on the market depends only on the company in question. But it is always easier to prevent the viola­tion in the form of dissemination of misleading information than to deal with its consequences.

Схемы не приводятся по техническим причинам.

Авторы: Victoria Y. PTASHNYK, Oleksandr P. MEDVEТSKIY

Источник: The Ukrainian Journal of Business Law. – 2014. – № 7-8. – Р. 22 – 23.

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